This trial hypothesizes that the combination of zidovudine and nevirapine (NVP) will more effectively lower maternal-infant transmission than zidovudine alone. This is a Phase III, randomized, double-blind study of NVP administered to pregnant HIV-infected women during labor, and to their infants between 48 and 72 hours of age. The primary endpoint is the incidence of HIV transmission from mother to infant. The study will also evaluate the following: a) Safety and tolerance of oral NVP in pregnant HIV-infected women and HIV-exposed infants, b) NVP pharmacokinetics (PK) in a large population of neonates, c) Impact of maternal medications on neonatal NVP PK parameters, d) Relationship between maternal viral load at delivery and HIV transmission, and e) Effect of NVP on HIV RNA levels in infants determined to be HIV-infected. Women will be randomized to receive either a single 200 mg oral dose of NVP or the corresponding placebo during labor. They will be randomized at any time after their 28th week of gestation and they will be followed for 4-6 weeks postpartum. Infants will receive a single 2 mg/kg oral dose of NVP or corresponding placebo administered between 48 and 72 hours of life. The infant's study drug will be the same as the mother's randomized treatment assignment. Infants will be followed for 6 months and will be tested for HIV at 4 to 6 weeks and at 3 and 6 months of life.